The China Iron and Steel Association has painted a challenging picture for Australia’s iron ore producers, arguing Chinese steel demand has entered an “era of reduction” and will decline in 2017.
CISA represents China’s biggest state-owned steel mills and generates forecasts used by Beijing to help formulate its five-year plans. Speaking at an iron ore conference in Perth on Thursday, CISA vice president Li Xinchuang said China’s steel industry had transitioned from a period of expansion to an “era of reduction” which would see the country’s steel demand decline 1.9 per cent in 2017 to 660 million tonnes.
Mr Li, who is also the head of China’s top planning body for its metals industries, the China Metallurgical Industry Planning and Research Institute, has long-clashed with iron ore heavyweights BHP Billiton and Rio Tinto over their forecasts that Chinese steel production will continue to grow.
CISA argues China reached peak steel consumption in 2014 at 702 million tonnes and, despite a slight increase in 2016, it would gradually decline to about 490 million tonnes by 2030. “We think Chinese steel production will decrease step by step,” Mr Li said. “How much gross steel we can produce will depend how much we can export.”
China is working to remove overcapacity in its steel industry to improve performance, which Mr Li said was already showing some “positive results” with a return to profitability but “still has a long way to go”.
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